An Introduction to Bitcoin & State Tax Issues
If you’ve been paying attention over the last few years, you’ve surely heard of Bitcoin, a virtual currency becoming more and more common – especially in California. But since Bitcoin is virtual and unregulated (at least at this point), there are a lot of questions surrounding the digital currency and how it relates to state tax issues.
What is bitcoin? Bitcoin is a virtual currency created in 2009. Transactions are made directly between two parties, without banks or other fees included. They can also be used anonymously, making it possible for users to buy or sell anything without it being easily traced back to them. Because bitcoins are stored in a "digital wallet" either in the cloud or on a computer, the FDIC doesn’t insure them, meaning they can be easily lost through server hacks and viruses.
What about regulation? As bitcoin has become more popular, the question of regulation has become more common. Two states – California and Colorado – are working to regulate this virtual currency due to its prevalence within their states. I would imagine more states will follow suit as bitcoin becomes more and more popular.Read more
2014 – The Year in Review
Thank you to all of our regular readers! The blog was an exciting addition to our firm this year and we’ve enjoyed bringing you current and thought provoking articles and summaries related to multistate topics.
We covered a lot this year, including:
- State of the Month – Every month we featured a different state of the union, covering its economic climate, tax scheme, and relevant tax credits and incentives available, along with some fun facts. Some of the recent states that we covered include Florida, Colorado, and Ohio.
- California Credits and Incentives Landscape – During 2014, California rolled out three new tax credits and incentives under the GO-Biz program (to replace the repealed EZ program), as well as enhancing the film tax credit. We reported on all of those here, including the California Manufacturers’ Exemption, Hiring Credit, and California Competes.
- Federal & Multistate Updates – The Marketplace Fairness Act was in the news a lot during 2014, although it was ultimately tabled by House Speaker John Boehner. Here are a few of the blogs in which we introduced the act, highlighted the updates, and provided our take on it.
- When we’re not blogging about multistate tax issues or tax credits and incentives we have also written about fundraising tips, charitable giving, and even fun topics such as calculating the amount of sales tax Santa Claus would hypothetically collect.
We hope you’ll continue to follow Miles Consulting Group in 2015 as we bring you the latest in multistate tax news.
In the meantime, we wish you and yours a very happy new year. See you in 2015!
Photo Credit: maaco via Flickr
Charitable Giving & Year-End Tax Tips
Can you believe 2014 is almost over? In addition to the hustle and bustle of the holidays, this is the time of year minds turn to year-end tax tips. Philanthropy and giving back to the community all year is important to Miles Consulting, which is why we encourage charitable giving activities. However, whether you’re donating as a business or individual, it’s important to remember recent changes to tax law.
4 Year-End Tax Tips for Charitable Giving
1. Double check eligibility. You’ll only receive a deduction for organizations that are qualified, so make sure you use the IRS’ Select Check to verify their status. It’s also worth noting that, even if they aren’t listed in Select Check’s database, government agencies, churches, temples, synagogues and mosques are qualified to receive deductible donations.Read more
Focus on Florida
Winter is the coldest season of the year and we folks in the Northern Hemisphere are currently in the midst of it. Although every state in the nation experiences lower temperatures, some experience more severe winters than others. Thus, at this time of the year snowbirds flocks to warmer locations such as Florida and so will we!
Business Climate
Speaking of warmer locations, Miami, Tampa, and Orlando have the highest daily mean temperatures of large US cities in December, January and February. In fact, the state’s average annual temperature (70.7 degrees Fahrenheit) is ranked the highest in the nation. The weather of the “Sunshine State” contributes to the two largest industries in Florida; Tourism and Agriculture.
Sales Tax & Santa Claus
The holidays are almost here! Although you may not think about sales tax while Christmas shopping, it’s interesting to think about how the rates vary from one place to another. For example, if you were buying a toy here in the Golden State, you’d be charged California sales tax. However, if you purchased it just one state north, in Oregon, where there is no sales tax, you would be exempt from the tax.
In honor of the holidays, I thought it would be fun to take a look at sales tax costs Santa Claus would need to budget for, assuming he bought each gift in state rather than relying on his elves in the North Pole.Read more
California New Employment Credit
In 2014, California’s tax credit and incentive landscape changed significantly. As of 12/31/13, the state’s lucrative Enterprise Zone Program officially ended. The Enterprise Zone Program offered several tax credits, incentives and deductions for California businesses and financial institutions (note that benefits for the multi-year EZ Hiring Credit will continue to accrue for several years, and unused credits generated from the EZ program can be carried forward). In replacing the EZ program, legislators indicated that they wanted more focus on credits that would create economic growth and jobs within the state beyond enterprise zones. They also wanted to remedy some perceived abuses with the EZ program. We worked with the program for many years, and while it wasn’t perfect, it certainly benefited many of the state’s disadvantaged communities. Cynics of the legislative process in California (author included) might say these changes were purely political. As you will see from our discussion of the new employment credit below, this is NOT a program meant to spur widespread hiring in California via usable tax credits as it is too restrictive to provide benefits to a broad tax base.
The New Employment Credit
The money that was previously allocated towards the EZ program is now being redirected toward three new incentive programs - the Manufacturers’ Sales and Use Tax Exemption, the California Competes Tax Credit, and the New Employment Credit. Theoretically, the New Employment Credit replaces the previous EZ Hiring Credit. The New Employment Credit is for qualified employers who hire qualified full-time employees on or after January 1, 2014.
Marketplace Fairness Act: Internet Sales Tax Update
About a month ago we shared the latest news surrounding the Marketplace Fairness Act. However, given how prevalent this issue has been lately, it’s certainly worth sharing recent updates from the last couple of weeks.
About the Marketplace Fairness Act
As a recap, the Marketplace Fairness Act would allow states to collect sales tax from purchases made on the Internet. Although consumers are already supposed to be paying this sales tax, online retailers aren’t required to collect it the same way brick-and-mortar stores do. The Marketplace Fairness Act as currently written would require online retailers with sales in excess of $1 Million to begin collecting sales tax on all sales – a significant departure from current laws. Although the bill passed in the Senate back in May 2013, it never made it to the House floor. Last month, Senate lawmakers announced they planned to link the Marketplace Fairness Act to Internet access tax legislation during the lame-duck congress to help push it through.
New Marketplace Fairness Act Update
The latest news surrounding the Marketplace Fairness Act is that House Speaker John Boehner says it won’t pass this year. In fact, he doesn’t even want it on the House floor, preferring it, “Pass the House Judiciary Committee before coming before the full House.” His spokesperson explained, “The Speaker has made clear in the past he has significant concerns about the bill.”Read more
Focus on Colorado
The word colorado means “colored red” in Spanish. The Colorado River was given this name by Spanish Explorers because of the red sandstone soil in the surrounding region. The territory inherited the name after the river and eventually became the 38th state of the US. This week we focus on Colorado.
Business Climate
Colorado is considered the 8th largest state area wise and has a very diverse geography. From the Colorado Eastern Plains to the Rocky Mountains, the state takes full advantage of the land and much of it is favored towards the agriculture industry. In fact, over 60% of Colorado’s land is used for agriculture. Livestock is one area of agriculture that has done especially well. Colorado has over 15,000 beef producers, 200 feedlots, and 20 USDA certified slaughter plants. Beef is the number one agricultural commodity from the state. In addition to livestock, the state is also the nation’s leader in producing beer, with nearly 150 breweries. Denver, Colorado is known as the “Napa Valley of Beer.”
The extensive geography plays in the state’s favor also for tourism. In 2013, Colorado experienced 64.6 million travelers and visitors spent $17.3 billion. Colorado is considered the “Switzerland of America,” because of its collection of mountains that are ideal for winter sports. These mountains attract millions of tourists to flock to ski resorts and has contributed in making Colorado #1 in the nation for overnight ski visits. Asides from the winter attractions, Colorado’s outdoors is just as enjoyable in all the other seasons. In fact, this past summer the tourism industry experienced waves of visitors and the state expects to break previous tourism records. Some are skeptical though and believe it is because of the legalization of medicinal and recreational marijuana use that more and more people are flocking into the state. Regardless, Colorado’s tourism industry is doing well.
Taxes
Colorado has a favorable tax climate according to the State Business Tax Climate Index. Of the 50 states, it ranked 19th due to having low corporate income tax (8th lowest) and individual income tax rates (13th lowest). Both are flat rates of 4.63%. In 2014, from January to July the state collected $5,650 million in individual income tax and $716 million in corporate income tax.Read more
Top States for Doing Business 2014
There are different approaches when it comes to picking the best state to expand your business into. While some owners select a location based on credits, incentives and state tax laws, others make the decision weighing factors like infrastructure, access to transportation and quality of life. What if you want to consider all the various factors? Area Development recently ranked the top states for doing business based on a survey of site selection consultants.
Top States for Doing Business – Survey Results
Area Development’s survey factored in three main areas:
- Overall business environment (such as cost of doing business and incentive programs)
- Labor climate (like competitive labor costs and availability of skilled labor)
- Infrastructure and global access (such as competitive utility rates and water outlook)
California Film Tax Credits
Film Industry in California
Hollywood California has long been considered the movie capital of the world. Historically, the state has been a great location for filming due to its landscape and weather conditions and eventually numerous motion picture studios began appearing in the area. The movie industry has developed substantially since its early beginnings and so has its costs. Pairing these rising costs with the additional tax ramifications businesses face within California, film studios began filming elsewhere. Since 2004, the state has lost over 18,000 jobs within the film and television sector.
California’s Expanded Tax Credit Program
Today, other states have become more appealing locations to film for several reasons, including not just movie settings but also financial purposes. Although there are still plenty of movies being filmed in California, the film industry is not as prominent in the state as it used to be. Thus, in February 2009 California created the California Film & Television Tax Credit Program to increase film and television production, jobs and tax revenue.
This program, administered by the California Film Commission (CFC), provides a tax credit equal to 20-25% of a company’s income tax and/or sales and use tax for eligible film and television productions. Qualified productions must film at least 75% of principal photography days or 75% of the budget must be spent in the state. If the tax credit is used for income tax purposes they are nonrefundable and carried forward for 5 years and can be transferred to an affiliate. Motion pictures considered to be a qualified “independent film” (less than $10 million budget) are allowed to transfer or sell their tax credits to an unrelated party. In addition, $10 million in tax credits is reserved for independent films. The application process requires providing supporting documents to prove eligibility and filling out necessary information and production information (e.g. type of production, schedule to film, and number of principal photography days). After this the CFC will review the applications and, if selected, issue a certificate for the tax credit.Read more
